The
Estate of Judith Wallace had TAXABLE INCOME of $25,000.
The Wallace income falls between:

Between

But
Not Over

Base
Tax

+
Rate

Of
the Amount Over

$10,700

-
- - - -

$2,764.00

35%

$10,700

The Estate of Judith Wallace's Estimated Taxes

=
Base Tax + (Rate x Amount Over)

=
$2,764.00 + [.35 x ($25,000 - $10,700)]

=
$2,764.00 + (.35 x $14,300)

=
$2,764.00 + $5,005.00

=
$7,769.00

Before she passed away, Judith filed her income taxes as a single individual. If Judith were still alive in 2009 and filing her taxes, her 2009 tax bill would have only been $3,348.75 (using
the 2009 income tax
rate table for single individuals). Because of the higher tax rates for estates, her estate paid $4,420.25 more in income taxes.

Example
#2

John and Linda Mulligan own an irrevocable trust that generated 2009 TAXABLE INCOME
of $10,000. The Mulligan trust income falls between:

Between

But
Not Over

Base
Tax

+
Rate

Of
the Amount Over

$7,850

$10,700

$1,823.50

33%

$7,850

The Mulligan Irrevocable Trust's Estimated Taxes

=
Base Tax + (Rate x Amount Over)

=
$1,823.50 + [.33 x ($10,000 - $7,850)]

=
$1,823.50 + (.33 x $2,150)

=
$1,823.50 + $709.50

=
$2,533.00

In 2009, John and Linda reported $130,000 in joint income, meaning that they were in the 28% tax bracket. Looking at the tax tables, it only takes $7,850 in income for a trust or estate to exceed that income tax rate, and enter the 33% tax bracket.

These sample equations
do not reflect standard deductions, mortgage deductions, or any other
credits that may decrease your estimated taxable income. Use only for
2009 income taxes. The names mentioned in these samples are fictitious
and not based on any individual. For illustrative and planning purposes only. For more information, or to review the official tax tables, please download Instructions for Form 1040.